Bashing Blinds

OK, the Germans won their big soccer match against the Greeks last Friday, contrary to my scenario. The Greeks never really had a chance. The Germans now romp into the semi-finals of the European Championships against Italy on Thursday.

With the Germans still ascendant on the sports field as well as economically, the Merkel-bashing goes on. But it does no service to solving the dangerous euro crisis which will once again be the subject of a summit meeting this week in Brussels.

I frankly don’t know whether austerity or an open growth spigot (of largely German money) is the right solution, as most U.S. voices seem to think.

I do know that the Germans, who fully understand Keynsian economics, strongly believe in their tough-love approach to the wayward economies of southern Europe. Their position is not pure stubbornness or, worse, pure Germanness, as all the cheap anti-German rhetoric suggests.

It should be noted that by insisting on reforms in the debt-wracked countries, the Germans are preaching what they have already practiced. Starting in 1998, they implemented a decade’s worth of painful labor market reforms—which are now paying off. Five or six years ago, Germany was still “the sick man of Europe.” Now that Germans have turned that around, they’re being called the meanies.

Germany’s economy booms, its unemployment continues to fall under 7 percent, its bond ratings are perfect. As I write this from Duesseldorf, I’m witness to a parade of prosperity in the Old City, including the sight of a Muslim family (head-covered mom) posing for photos beneath a statue of Jan Wellem, the elector who put Duesseldorf on the map 300 years ago.

The evidence is more than anecdotal, of course. And you can find plenty of folks suffering on the margins. But there is no disputing that Germany is in the throes of a new economic miracle, reminiscent of the first one in the 1950s and 1960s. Germans achieved this one by biting a lot of bullets, with lots of labor union resistance. Today, the unions love the boom and recently negotiated some big raises.

These are among the reasons why Germans believe in playing by the agreed rules and the necessity of strong reforms. They are well aware, too, of the argument that an artificial “internal devaluation” aided Germany’s export-driven economy—because the euro was weakened by its weak members, boosting exports, and because German labor accepted a kind of wage freeze over the 2000s.

But a cooperative labor-management approach to economic challenges is the time-tested German model. It worked in the 1950s and 1960s; it worked again in the 2000s. Eschewing wage increases in tough times is called doing the right thing. That makes it difficult for Germans to understand why they’re now accused of promoting the wrong thing.

Even though I do not take a position on reform v. growth—I am not economist enough to decide—I do worry about the unrelenting German-bashing, which distorts a serious debate. The carping has spread well beyond the fake photos in the Greek press of Chancellor Merkel and her finance minister, Wolfgang Schauble, done up as Nazis.

The Irish Times, for example, tarted up Merkel in a dirndl, showed her wielding a horsewhip over a manacled prisoner while refusing a wheelbarrow of cash, saying: “It is not zee munny! It is zee discipline!” Cute.

There’s nothing wrong, of course, with skewering Angela Merkel and all of Germany if you don’t like their policies (and, believe me, virtually everyone in Germany supports Merkel’s position). But, let’s face it, the Germans are an especially low-cost target for reckless invective.

After all, they are Germans. If editors caricature them as Nazis, what are the Germans going to say?

But cheap shots are not an argument. If a large part of your position is that the Germans are inherently flawed, which economic theory is that? You can hate austerity and love Keynes without going ad hominem, which is happening on a collective basis. The implication is that the only reason Merkel believes in fiscal discipline for the basket cases in the euro zone is that she’s German.

How else to understand this line from a Washington Post editorial: “Only in Germany could irresponsible policy take the form of self-denial”? Self-denial is something we teach our children. If a virtue is suddenly a flaw, why is it “only” a German flaw? Because Germans are Germans? We’re getting close to slurring on the basis of national origin here. Will race or religion be next?

Just ask the Greeks. Budgetary sinners they surely are, but the trashing they’ve received from some German publications on the basis of cultural stereotypes inflames rather than informs debate. “Bye-bye, Greeks!” headlined a boulevard tabloid before last week’s decisive soccer match. “We can’t help you guys now.” A German newsweekly put on its cover a statute of Aphrodite wrapped in a Greek flag and giving the world the finger—an offensive image in Greece.

Piling-on fever can lower resistance to conspiracy theories. Ezra Klein’s recent unsourced suggestion in the Washington Post of a secret-sounding German and northern European plan to drive the Greeks out of the euro zone without admitting it seems a case in point. Klein is a respected economic journalist and if he’s heard of such a plan, that’s an important story. I would like to know where he heard it—or at least how much credibility he ascribes to sources he has “begun to hear.”

It is absolutely true that Merkel believes that moving the goalposts now would lift all reform pressure off the mismanaged sovereigns. It is her core argument—she and her government have said so repeatedly. But it’s equally true that they’ve committed publicly to keeping Greece in the club; a conspiracy to do otherwise would be big news.

Getting to a solution in Europe is a tough and messy business. Neither of the pure arguments—total reform or unfettered stimulus—seems wholly convincing, which is why we’ll probably get a compromise package out of this week’s summit meeting in Brussels, like the gradualist approach recommended by Will Marshall. Either way, blindly bashing the Germans is an invitation to lazy thinking.